07/25/2006 11:00PM

Separate budgets for merged groups

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LEXINGTON, Ky. - The National Thoroughbred Racing Association and Breeders' Cup Ltd., which merged their operations in 2000, will operate under separate budgets beginning next year under a new operating agreement negotiated between the two organizations' separate boards.

The operating agreement, which expires at the end of 2008, was approved by both boards during conference calls on Tuesday, according to officials at the organizations. The boards had been negotiating the new agreement since last year, under pressure from members of the Breeders' Cup board who have been critical of the NTRA's use of Breeders' Cup funds.

The new agreement averts a possible separation of the two entities.

Since the Breeders' Cup and the NTRA merged in 2000, the relationship between the two organizations has been strained by criticism from many central Kentucky breeders who were uneasy with the role played by the NTRA in setting the agenda for the Breeders' Cup, which was formed by breeders in the early 1980's and whose signature event, the Breeders' Cup World Thoroughbred Championships, has grown into one of the most popular racing days in the world.

The purpose of separating the two budgets "is to develop a framework of internal trust between the organizations," said Craig Fravel, the chairman of the NTRA.

In addition to the separate budgets, the new operating agreement will also require that each organization has its own chief executive. The NTRA and Breeders' Cup are headed by Greg Avioli, who was appointed interim chief executive of both organizations following the retirement of D.G. Van Clief earlier this year.

According to a five-year plan released by the NTRA in the summer of 2005, Breeders' Cup was expected to contribute $42.5 million in revenues to the combined $71 million budget for the two organizations in 2006, or approximately 60 percent of the combined revenues for the two organizations.

Beginning in 2007, both organizations will be responsible for their own revenues, expenses, surpluses, and deficits, according to a senior vice president of the NTRA, Keith Chamblin. The two organizations will continue to work jointly on television, marketing, public relations, and sponsorship initiatives, and will continue to share offices in Lexington and New York.

According to the five-year plan, the Breeders' Cup is expected to have revenues of $43.5 million in 2007. The NTRA is projected to have revenues of $13.6 million from member dues, which are collected from tracks, horsemen, and sales participants, and $15.5 million in sponsorship and promotion revenues, though some of those revenues are expected to be allocated to each organization.

The two boards reached the new operating agreement 12 days after the organizations announced that they were firing 25 of their 67 employees by the end of the year. The reductions were pushed by the Breeders' Cup board in an effort to make the NTRA leaner and more efficient.

Though the NTRA had in the past used Breeders' Cup revenues for its purposes, Fravel said that it would likely work with the same amount of revenues in 2007 "on a program-to-program basis" because of the recent reductions in staff and expenses.